Results analysis from Kepler Trust Intelligence

US Solar Fund (USF)

20/09/2021

Results analysis from Kepler Trust Intelligence

US Solar Fund (USF) has reported results for the first half year during which its portfolio of solar assets has been fully operational. The trust paid dividends in line with target, and they were covered by operational cashflow for the first time, passing a key milestone for the strategy since launch.

US Solar Fund, which has a dollar (USF) and sterling (USFP) share class, also raised money during the period, using it to refinance debt at cheaper rates and reduce the gearing on the portfolio. The chairman describes a supportive environment for the asset class, with the largest quarter of installations to date reported in the US.

Kepler View

USF's manager New Energy Solar Manager's experience and connections are important advantages in the US, where tax equity investors typically partner with institutional investors to take advantage of the subsidy regime. The US solar market is c. 6.5x larger than the UK's and is expected to grow to multiples of its current size.

We think the size of the market should be an attraction for the UK investor, as it offers diversification from the UK and a greater chance of growth. The comments from the chairman on the strong opportunity pipeline are encouraging in this regard.

USF's long-term contracted cash flows are another attractive feature. Cash flows are fixed for a weighted average period of 14.9 years, providing certainty over the income received - although we note this income is fixed in dollars, so there are currency fluctuations to consider.

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